Slovak tax burden amongst lowest in Europe

The weighted tax-to-GDP ratio (i.e. the total amount of taxes and social security contributions) in the EU27 increased to 39.9% in 2006 from 39.3% in 2005. The EU27 tax ratio is nevertheless lower than in 1996 (40.3%) and the peak of 41.0% in 1999. The downtrend which had started in 1999 in most Member States stopped in 2005. In 2006, the overall tax ratio in the euro area (EA15) was 40.5%, up from 39.8% in 2005. Since 1996, taxes in the euro area have followed a similar trend to the EU27, although at a slightly higher level.

EU tax levels remain generally high in comparison with the rest of the world, with the EU27 tax ratio exceeding those of the USA and Japan by some 12 percentage points. However, the tax burden varies significantly between Member States, ranging in 2006 from less than 30% in Romania (28.6%), Slovakia (29.3%) and Lithuania (29.7%), to almost 50% in Denmark (49.1%) and Sweden (48.9%).

In the past decade significant changes in tax-to-GDP ratios have taken place in several Member States. The largest falls were recorded in Slovakia, where the overall tax burden dropped from 39.4% in 1996 to 29.3% in 2006, and Estonia (from 35.1% to 31.0%). The highest increases were observed in Cyprus (from 26.4% to 36.6%) and Malta (from 25.4% to 33.8%).

Labour taxes remain the largest source of tax revenue, representing close to half of total tax receipts in the EU27. Taxes on capital accounted for approximately 23% of total tax receipts, and consumption taxes 28%.

This information comes from the publication Taxation trends in the European Union: Data for the EU Member States and Norway issued by Eurostat, the Statistical Office of the European Communities and the Commission’s Directorate-General for Taxation and Customs Union. This publication compiles tax indicators in a harmonised framework based on the European System of Accounts (ESA 95), allowing accurate comparison of the tax systems and tax policies between EU Member States.